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Ownership Structure and Corporate Performance

A Panel Data Analysis for the German Market

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Katinka Wölfer

The book sheds new light on the relation between equity ownership and corporate performance. Empirical studies presented in this book are based on a large panel data set and model the impact of concentrated ownership on performance, with nonlinear effect shapes being estimated through cubic splines. The final model incorporates the identity of owners into the investigation and illustrates the differing performance effects of various large shareholders. This approach adds to the understanding of ownership effects as previous research was mainly concerned with the role of ownership concentration and neglected the identity of blockholders as an equally important dimension of ownership. The new perspective will give fresh impetus to researchers, corporate decision makers and public policy.
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5 Research Design

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5      Research Design

5.1      Introduction

This chapter develops the research design for the subsequent empirical analyses. Section 5.2 describes the used data, and Section 5.3 outlines the model. Finally, Section 5.4 introduces the econometric approach to be applied to the data.

5.2      Data

The research design is grounded on the description of the applied sample selection process and variables used. This is followed by descriptive statistics.

5.2.1      Sample Selection and Data Sources

The data sample used for the empirical analyses is based on companies included in the composite DAX (CDAX). The index comprises all companies listed in the general standard and prime standard segments at the Frankfurt Stock Exchange and reflects the performance of the overall German equity market.102 The sampling period spans the 5-year period from 2005-09 and covers all major phases of an economic cycle, including a phase of expansion (2005), boom (2006-07), contraction (2008), and recession (2009).103 The sample consists of all companies included in the index at year-end.

The initial sample pool includes 745 firms. First, 18 companies issuing only preferred stock (Vorzugsaktien) but no common stock (Stammaktien) are excluded from the sample. Preferred stock typically has a priority over common stock in the payment of dividends but carries no control rights. This class of shares can thus not be considered in an ownership-performance ← 133 | 134 → analysis. Second, following, for example, Edwards and Weichenrieder (2004), McConnell and Servaes (1990), and Pedersen...

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